Ujala - eeslindia.org · of team work besides the team’s ability to stay credible, agile and...

Ujala•

I led the way!

energy effIcIency ServIceS lImIted(a government of IndIa enterprISe)

energy effIcIency ServIceS lImIted(a government of IndIa enterprISe)

Ujala•

I led the way!

energy efficiency Services limited(a Joint venture under the ministry of power, government of India)

4th & 5th Floor, IWAI Building, A-13, Sector 1

Noida, Uttar Pradesh 201301

Tel: +91-120-4908000

www.eeslindia.org

Published year: 2017

Publisher: Managing Director Energy Efficiency Services Limited (EESL)

No part of this publication can be reproduced, copied, duplicated, distributed, misrepresented or altered in any way without obtaining express written permission from

Energy Efficiency Services Limited (EESL), New Delhi.

© EESL 2017—All Rights Reserved

Credits

Author: Balaji chanDraMouli

Design: Puja ahuja, anil ahuja

Photography (except where expressly credited): ViDit aggarwal

Cover photograph (tailor-master Anwar Husain in New Delhi): anil ahuja

EESL Coordinator: SauMya tiwari

Printed by: Lustra Print Process Pvt. Ltd

vISIon

eeSl seeks to unlock market for

energy efficiency in India estimated at $11.4 billion

amounting to about 15 per cent of present consumption.

It seeks to create market access, particularly in public facilities

like municipalities, buildings, agriculture, industry etc., implementing

innovative business models, besides nurturing private sector energy Service

companies (eScos) in an effort to ensure replication.

mISSIon

energy efficiency Services limited (eeSl) is promoted by ministry of power, government

of India, as a Joint venture company of four central power Sector Undertakings viz.,

ntpc ltd, power finance corporation ltd. (pfc), rural electrification corporation

limited (rec) and power grid corporation limited (pgcIl). eeSl was set up to

create and sustain markets for energy efficiency in the country.

eeSl works closely with Bureau of energy efficiency (Bee) and is

leading the market related activities of the national mission for

enhanced energy efficiency (nmeee), one of the 8 national

missions under prime minister’s national

action plan on climate change.

Getty ImaGes

5Ujala u I LED the way

agaInSt all oddS: eeSl’S JoUrney

THE story of EESL could well have been that of a still born child. In early 2013, one of its key

promoters, Power Grid Corporation Limited (PGCIL), wrote to the government that its investments

were going nowhere. The company had been set up in late 2009 and over the next three years, it had

hardly done any business.

The course of destiny, however, led the company up a different path. With the Union government

lending a strong shoulder and restructuring EESL’s management, the company embarked on a steep

growth trajectory.

Over the last four years, between 2013 and 2017, the company’s revenues have grown 46 times, while

profits have vaulted over 50 times. The promoter’s fears have been well assuaged. The story, however, is

not just about mere cold profits. It is about a business that has been built on the edifice of profound and

deep rooted social responsibility. Hence, notwithstanding stellar financial performance, the EESL story is

best introduced by throwing light on the far reaching social impact achieved by its various initiatives.

In the first section, Panaroma, we present stories from across the country. They tell us about the

change that EESL has brought about in the lives of people from different walks of life.

In the second section, Impacting Business, we elaborate on how various institutions have benefitted by doing

business with EESL. For one, it is helping financially fragile power utilities turnaround. On the other side, EESL

has created a market for entrepreneurs to set up factories in the country to manufacture LED bulbs.

The third section, Building An Organisation, gets to the heart of it all. It explains how EESL achieved

its goals. What were the challenges and how did it overcome it? How has its strategy evolved in the last

four years? And, finally, what lies ahead?

“I urge you all to use LED bulbs, save money, save energy and take part in helping our nation.”

Shri Narendra Modiprime minister of India


Foreword

Energy Efficiency Services Ltd.’s journey over the last four years is a powerful narrative. It is a story

of team work besides the team’s ability to stay credible, agile and seize opportunities.

During the early days when we cast our net far and wide with pilot projects to spread the word

about energy efficiency, the team left no stone unturned to reach out to key stakeholders in the coun-

try’s power sector. They were convinced about what they were selling.

The nature of challenge changed in early January 2015, when Prime Minister Shri Narendra Modi

announced that EESL’s bulb replacement project would be a national program. It was now about en-

suring delivery on a scale unseen before. As much as that, it was also about creating a healthy market

for energy efficiency. Today, if the sector is witnessing a 20-odd per cent growth year-on-year, the EESL

team can, for a large part, take credit for it. The knock-on benefit to the economy has been significant.

Factories have come up, jobs created.

All this would not have been possible without the unflinching support of EESL’s owner, Government

of India. They have facilitated and ensured resources for EESL to implement its ambitious projects.

Both the political class and the civil servants have gone out of their way to help EESL in its endeav-

ours. And, they continue to do so.

I am overwhelmed by their generosity and would take this opportunity to express my gratitude

to them. They have enabled EESL to not only deliver on its commitments but also help it grow as an

institution. Today, EESL’s institutional capabilities, its systems and processes, have enabled it to di-

versify not only across the spectrum of energy consuming devices but also to take flight and look for

opportunities overseas.

Our overseas ventures have done well and are growing. This is a gentle reminder of ours roots.

I would like to thank the public sector promoter companies and their managements for supporting

EESL’s efforts since inception.

—Saurabh Kumar, MD, EESL

lighting up the future

prime minister narendra modi inaugurating the led upgrade of lighting systems in the Indian parliament complex

PtI

41BUIldIng an organISatIon

we want our Money Back ........................................ 42

Getting a Foot in ......................................................... 44

Soaring High ............................................................... 51

evolution ...................................................................... 54

National Ujala dashboard ........................................ 56

06

c o n t e n t S

25panorama

Insight into how eeSL has impacted the lives of people

Celebrating the eternal City .................................... 12

“I can do what I want to” ......................................... 14

An Innkeeper’s Journey ........................................... 16

The Kushiguda Led Activist..................................... 18

Quenching Thirst, Creating opportunities ............ 20

when darkeness Hurt .............................................. 22

Impact

doing business with eeSL has helped institutions and markets grow

Grim Prospects .......................................................... 26

disruption Agent ........................................................ 30

Catalysing ‘Make in India’ ....................................... 32

enabling Growth, diversity ...................................... 34


IntroductIon

real life stories. how did eeSl make a

difference?

Panorama1

12 Ujala u I LED the way

IntroductIon

Getty ImaGes


IntroductIon

celeBratIng the eternal cItythe city of varanasi or Kashi holds a very important place in Indian mythology. puranas, the ancient hindu

scriptures, define the place as one that is eternal. for, in it, Shiva, the lord of destruction and change,

notes,”Because I never forsake it nor do I let it go, this place is therefore known as avimukta.” avimukta, a

Sanskrit word, refers to one that is not let loose. Shiva ‘s description is an important distinction. the scriptures

have it that the Universe undergoes periodic destruction, or pralaya. the ancient city of Kashi, thus escapes

this cleansing, protected by the might of the lord, thereby establishing its eternality.

So, unlike other places of pilgrimage, varanasi beckons people to come and stay back forever. eeSl

celebrates this spirit of endurance and immorality. It has replaced the city’s street lights and sold over 1.3

million domestic led bulbs in the city.

THe CITy oF VArANASI

Led THe wAy!

Street lights in the heritage rich city of Varanasi

have been replaced.

Savings:

8.7 Million Units (Kwh) per annum


PANorAMA

“I can do what I want to”

Mercy Susan, 15, is a multifaceted girl. She enjoys playing the piano as

much as she practises yoga and karate. Not that she is lacking in academic cu-

riosity either. Now in her Tenth grade, she enjoys Mathematics and Science. “I

like Maths since I enjoy solving problems,” says Mercy with a gentle smile. The

answer resonates at a deeper level; Mercy is an orphan. She came to Chaitanya

Mahila Mandali, an orphanage in Secunderabad, Andhra Pradesh, around four

years back. She shares her room with over fifty children of varying ages. That,

however, has hardly dimmed her spirit or ambition in life. Her thirst for knowl-

edge is indomitable. “I enjoy reading since I learn new things and I feel happier

about it”, quips Mercy.

Mercy dreams big, and with a big heart. “I want to become an IAS officer be-

cause he takes care of the district,” she says. At this tender age, she has some of

the key ingredients for success—focus and hard work. Mercy is quick to open a

book and read when she gets a chance. However, the incandescent bulbs in her

dormitory weren’t very bright.

EESL, as part of its broader mission to help and support the weaker sections

of society, supplied the orphanage with LED bulbs to replace the existing incan-

descent lot. “With the other bulb I used to study 2-3 hours, with the new ones,

I put in 3-4 hours.” says Mercy. The brighter light has a larger impact. “It gives

me hope, I can do what I want to,” she says gleefully.

EESL salutes this spirit. The story of Mercy resonates across the country.

Children left to the care of the State and other social institutions believe in

themselves and their country. At EESL, one of the key aspects of our business

model is that as much as it earns profits, it also seeks to maximise social impact.

mercy Susan likes to read before going to sleep on her bunk bed at the orphanage


PANorAMA

an InnKeeper’S JoUrney National Highway 1, or NH1 as it is popularly known, is not just any other

vehicle pathway connecting a slew of cities. It bears immense historical signif-

icance; resting on the imprint rolled out by the famous 16th century Moghul

ruler who came from humble origins, Sher Shah Suri. The Afghan-origin ruler

made the travellers comfortable by erecting roadside inns and lodgings. Five

centuries later, cut to the present day, such arrangements are made good by en-

trepreneurs who face many challenges. For one, there is stiff competition along

this busy 456 km trunk highway that connects the national Capital city Delhi to

the border city of Atari in Punjab, winding its way through Haryana.

Owners of these roadside restaurants or Dhabas pay electricity bills far in

excess of what it costs the utility to supply. And yet, the utilities don’t make

money. The reason is not far to see. For example, in Haryana, the agriculture

sector, which accounts for 26 per cent of energy sold by the utilities rakes in a

mere 2 per cent of revenues for them.

Sometime in August last year, Anil Kumar, 35, a resident of Panipat, Haryana,

decided to open a restaurant along the highway. Competition was stiff; he had

seen a few restaurants in the vicinity close down. Yet, he decided to take the

plunge. And, for good reason. He owned a parcel of land along the highway, 79

miles from Delhi. Taking a cue, he christened it ‘79 Milestone’. Besides, as he

put it with an ambitious attempt at brevity, “kheti baadi ‘agitate’ ka kaam hai…”

(farming is stressful, given the nature of the business).

But then, the highway food business was not going to be easy. Anil had to keep

his costs down as much as attract customers to his eatery.

So, when he started his business on 17th August 2016, he turned to the

LED bulbs sold by EESL to light up his restaurant. They were less expensive

than those available in the market and besides, helped reduce his electricity

bills compared to the others. Importantly, the bright bulbs also help draw

highway travellers to his restaurant and this improves his business turnover.

His trust in the State has gone up: “Sarkaar ko aisey aur bhi scheme laney chahihey

(the government should come up with schemes like this),” says Kumar, who is

all too pleased with the gains.

The story of Sunil Kumar is not in isolation. Commercial enterprises across

the country, however small, end up paying high power bills. It is one of the many

challenges they face. Their journey is a template witnessed across the country

-that of the indomitable human spirit rising to the challenges that the business

environment throws up.

EESL salutes the resilience of the Indian entrepreneur. It is a privilege to en-

join his journey to succeed.


INTrodUCTIoN

(topmost) national highway 1: a lifeline for roadside inns

(above) led lights illuminating a dhaba’s courtyard

left: anil Kumar and his brother Sunil Kumar, owners of 79, milestone, lift a roti (bread) from a earthen oven

anIl ahuja


PANorAMA

(top) top: rajni talla reflects on her association with eeSl as being part of their sales force

far left: on the move, the Self help group goes from door to door selling led bulbs

(left) the group workers soliciting a potential buyer


PANorAMA

“We purchase the bulbs

and sell it down. We sell

it to our family members

and then to outsiders.

The money is a lot better

than other vocations. I am

hopeful of making upto

$108 per month.”

Rajni Tallateacher and Social worker

the KUShaIgUda led actIvISt Rajni Talla, is more than just a homemaker. A resident

of Kushaiguda, a suburb of Hyderabad city, she teaches

Mathematics and Science in a local school. Rajni earns a

modest $77 per month, a little more than half the coun-

try’s capita income. Her husband is the main breadwin-

ner; he has a white-collar job at a local healthcare compa-

ny and earns works $230.8 per month, or closer to twice

the per capita figure. That leaves them comfortable only

if her ambitions are modest. And, they aren’t. As much

as she wants to provide her two sons, Sanketh Goud, 9,

and Manish Goud, 7, with good high school education

(which is expensive), she also wants to save adequately

for the future.

The State did come up with opportunities. Since a key

ingredient for enterprise is seed capital, the local munici-

pal corporation helps provide interest-free loans for Self-

help groups (SHG). Rajni joined one of them. The deal

was simple. They could get loans for $15,386 and use the

money to set up a small shop where they could, say, sell

vegetables, put up a photocopy machine or simply go door

to door and sell sarees. The ventures were profitable, but

yielded no more than $31-$46 every month.

EESL stepped in and decided to use the Self Help Group

channel to sell its LED bulbs. Explains Rajni, “We purchase

the bulbs and sell it down. We sell it to our family mem-

bers and then to outsiders.” The money is a lot better than

the other vocations. “I am hopeful of making upto $108 per

month,” reckons Rajni. The gains are more than just mone-

tary. “it is not just about work for us. We feel we are helping

the government. This gives us confidence that we can do any

kind of work”, says Rajni, with a beaming smile.

EESL’s unique sales strategy, that of enrolling Self-help

groups (SHGs), is in line with its larger philosophy of do-

ing inclusive business—business practices that help benefit

low income communities. Towards this end, EESL holds

training sessions for the SHG members during which they

are acquainted with products and their benefits. Armed

with this information, they visit neighbourhood houses

and sell the products.

This initiative of EESL has had a knock-on effect. It builds

trust and confidence between the State and the citizen.

“When schemes are given, and they (the government) fulfil

the promise made, our expectations are met”, says Rajni.

Rajni’s life has indeed improved after EESL has entered

her life. It is not just about more money in the kitty. Back

home after a long day’s work, she is a lot happier. The rea-

son: EESL’s LED bulbs. “After coming home, more light

means pleasantness… we are not irritable at home and

more positive at work,” reflects Rajni.

EESL looks to support empowerment of women as part

of its inclusive growth strategy.


PANorAMA

QUenchIng thIrSt, creatIng opportUnItIeS

NS Mahesh, 38, is a farmer, who tills lands in Nedaghatta village, three

hours’ drive from Bangalore city. Traditionally, his family has been cultivating

Paddy and Ragi (finger Millet) in his three-acre land holding. The soil is rich

and the weather right to grow these water-intensive crops. Moreover, Mahesh

doesn’t have electricity bills to pay—the State gives free supply.

However, this hardly sums up his situation; Mahesh has a litany of woes to

deal with. For one, electricity supply is restricted—four in the day and three

at night. Moreover, a breakdown of supply, es-

pecially during the critical window period of

the sowing season, could be potentially hazard-

ous—the electricity supply utility could take

upto a few days to set the fault right. There is

little that he can do about this.

Then again, the electric pump that raises

water from below the earth for irrigation mal-

functions a few times every year. This means

expensive repairs. Mahesh is at the mercy of

the local repair shops. Not only that, they also

guide him on the choice of pumps—he can’t

afford the expensive ones that are more reli-

able since his budget depends on the earnings

from the fields.

Adding to his woes is the difficulty in pro-

curing labour to help manage the fields. The

State government provides, amongst other benefits, free grains like what and

rice to socially and economically backward sections of the society. This reduces

the incentive to work on a regular basis.

EESL stepped in to help Mahesh. As part of a pilot scheme, they installed an

energy efficient 5 HP agriculture pump in his farm. The pump uses less elec-

tricity and generates greater suction power, thereby lifting more water to the

surface than the earlier machine. Ofcourse, this eliminated his hefty annual re-

pair bills. But there was something more significant in store. Higher and reliable

water supply or higher water security meant he could focus on other farming

choices that yielded higher returns than the traditional Paddy and Ragi.

Mahesh could now diversify in greater measure into non-traditional crops that

have a higher demand, for example, survey trees that supply to the construction

industry. This requires less labour and fetches a higher price in the market. Mahesh

planted Survey trees on four acres of land that was earlier dedicated to paddy.

The economics was compelling:

Says Mahesh, “In the case of Paddy, we earn around $308 per acre. Since

it is a bi-annual crop, we end up with $615.

Right now, due to high demand from con-

struction industry, earnings from Survey

trees which is a three-to-four-year crop is

over one lakh per annum. Besides, it requires

only water and no labour.”

In effect, EESL helps farmers like Mahesh

manage their crop risk better. Going forward,

EESL is talking to utilities to install solar pow-

ered agriculture pumps. No doubt, the high

upfront investment proves to be a challenge

However, it can prove to be huge opportunity

at many levels. Here’s why:

Utilities struggle to keep up with the po-

litical mandate of keeping farm tariff at well

below what it costs to serve the farmer. So,

during the day, when overall demand is high,

the supply is restricted to a few hours. Now, with solar pumps, the farmer will

be no longer lean on the utility for supply during the day. On the other hand,

when demand softens after sunset, the utilities can sell power to the farmers.

Not only that, even during daylight, the farmer will not need all the electricity

that the solar panels can produce. In turn, he can sell the spare electrons to the

utility and make money.

EESL believes in pursuing such ‘win-win’ sustainable solutions.


PANorAMA

(left page) n S mahesh: a farmer in mandya district, Karnataka

(this page) farmer mahesh’s mother hanumamma cuts grass in the farm to feed her livestock


IntroductIon


PANorAMA

when darKneSS hUrt Sugandha, a three-and-half year old child, has felt pain a lot more than most

children in her age group. Sometime in mid-August this year, she fell from a height

of fifteen feet to the ground. Fortunately, she survived with no major injuries.

It was an incident that was waiting to happen.

For, Sugandha lives with her family in a small bare walled single room ten-

ement in Ber Sarai, an unplanned colony that still reflects its rural pedigree in

the otherwise tony south west district of the Capital city of Delhi. The lanes and

by lanes are as if stacked on either side with match box sized houses of irregu-

lar sizes and dimensions. These offer cheap accommodation. And, Dharmender

Rajghar, Sugandha’s father, can ill afford to pay any more rent; he is a daily

wage-earning carpenter.

Poverty raises its ugly head in other spheres too. Dharmender’s residence

does not have a washroom abutting the living space. The toilet is located on the

first floor, which otherwise is an open terrace. There is a steep discount on pri-

vacy. But that is not what Dharmender worried about. There was a bigger haz-

ard - the terrace did not have a parapet wall, nor was it fenced. So, he would en-

sure that when Sugandha was accompanied by her elder brother Saurabh when

she visited the toilet at night.

But one night, his fears came true. Saurabh failed to notice Sugandha emerge

from the toilet and slip away into the darkness of the terrace. And, there was no

barrier to save here from a fall to the ground. Ironically, his choice of residence

helped in this hour of need. Several from his village in Uttar Pradesh were residing

Sugandha, with her father dharmender in their one room tenement in South west delhi


PANorAMA

in the same locality. Together, they rushed the child to a nearby hospital.

This time, he was lucky. But that hardly comforted him. After all, it could

happen again. But there was little he could do; shifting residence was unafford-

able. A few days later, EESL eased his burden.

Around the time Sugandha fell, EESL was rolling out its scheduled replace-

ment of street lights in South Delhi Municipal Corporation. The replacement

was a lot brighter. “Yeh naya light jyada roshni deta hain aur terrace pey andhera

kum hai (the new lights provide more illumination and the terrace is less dark),”

says Dharmender. He feels a lot more comforted.

EESL is currently in talks with several cities and their municipalities to un-

dertake replacement of street lights.

The commitment by EESL to offer higher illumination is backed by a mainte-

nance service that sharply reduces the down-time of these lights. As a result, the

streets are a lot safer. Every way.

eeSl’s street bulbs turn a dark terrace into a play area

2

doing business with eeSl has helped institutions

and markets grow

Impact


BUSINeSSeS

women and children at a primary healthcare centre funded by a state government. eeSl is working with state power utilities to lower their financial burden. this enables them to reduce their dependence on the State and hence release more funds for healthcare and other welfare measures.


IMPACT

grIm proSpectS THE financial health of the power distribution utilities vastly impacts the

overall economy of a country. In the absence of efficient competitively priced

electricity supply, consumers resort to alternate sources that are inefficient and

expensive. The woes don’t end there. Once the problem acquires a chronic na-

ture, the financial burden on its owner, the State government, becomes sizeable.

This hurts the latter’s ability to undertake other welfare measures.

The Indian power sector is steeped in this very morass. The more electricity

the utilities sell, more money they lose. Against an averaging cost of supply of

8.3 cents per unit of electricity, the utilities earn 7.4 cents per unit. In other

words, let alone profits, even the cost recovery is short by around 11.5 per cent.

This lopsided equation snowballs into a staggering loss for the utilities. On a na-

tion-wide basis, during 2015-16, it was as high as $9.74 billion (if we keep out

past losses), or close to the annual capital expenditure program of the country’s

most populous state Uttar Pradesh.

To address this chronic vexed issue, the Union government has, over time,

rolled out several reform measures to help the utilities’ eliminate the revenue

gap and restore profitability. The most recent of these was an ambitious pro-

gram by the NDA government in late 2015. For one, it seeks to scoop out the

accumulated losses, which stands at a humungous $63.68 billion, a little over a

quarter of the country’s GDP, off the utilities’ books. On the other side, there

are several initiatives afoot to improve its operational and financial efficiency.

While the utilities are undergoing such extensive surgery and rehabilitation,

Photograph curtesy: W

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IMPACT

in a manner of speaking, the need of the hour is to provide

measures that impose no additional financial burden on the

utility and are yet able to improve the financial position.

EESL lends a helping hand

In this context, EESL’s flagship program ‘Ujala ’provides

immense succour to the utilities. The program seeks to

replace 770 million bulbs across the country with LED

ones that consume less electricity and provide more light.

All this by 2019. Thus far, in a short span of four years, it

has replaced around 268 million bulbs across the length

and breadth of the country. As a result, utilities now buy

less electricity to light up these bulbs. The savings are not

small. It is as much as $338 million per annum or 3.5 per

cent of the total annual losses recorded by the utilities.

Besides bulbs under the Ujala program, EESL has sold

energy efficient LED tubelights and fans as well, which

too have contributed to avoidance in power purchase by

the utilities.

EESL’s efficiency devices program also provides an indi-

rect benefit. It reduces the peak power demand in the coun-

try and to that extent lowers the price of electricity in the

market. The gains are significant—in July 2017, it was as

much as 7,000 MW, or 4 per cent of the peak demand. In

fact, owing to EESL’s intervention, the unmet peak power

demand has been curtailed at 1.5 per cent; in its absence the

deficit would have bumped up to 6.5 per cent. This, again,

translated into financial terms, is no small sum.

In other words, EESL’s program enables the utilities to

lean less on the government to make good its losses, in

one manner or the other. In turn, this enables the state

governments to funds welfare and development schemes

like health care and education in greater measure.

the StrUggle for UpKeep The story of municipal governance in India precedes its

independence in 1947. During British rule, there was

disenchantment over the poor services provided by the

State to the common man. This aroused nationalist senti-

ments that fought for basic amenities like education and

healthcare. And so, the first municipality came up in 1688

in Chennai. Ofcourse, it wasn’t a case of softening. It was

more about alignment of interests. Municipal-level man-

agement facilitated ease of governance. This helped pre-

vent epidemics that would otherwise burden the British

administration. There was one more reason. Collecting

taxes would become a lot more palatable. Taxation would

then be viewed as an instrument to ensure public good

flowed back to the people through the municipality. Of-

course, the latter was feeble in its endeavour and hardly

quelled the clamour for freedom.

However, even after India gained freedom, the underly-

ing challenge for municipalities to raise money and provide

basic civic amenities to its citizens didn’t go away. They re-

main short on money. In such a scenario, conservation and

efficiency plays a big part in reducing bills and freeing up

financial resources to serve the common man. EESL has

reached out to several municipalities to help reduce their

power bills in lighting up the street lights. Not only that,

EESL also maintains the lights for a seven-year period, at-

tending to consumer complaints through an online moni-

toring system. This releases the managerial burden on the

otherwise stressed municipality services. Importantly, the

replacement is being done through an innovative financial

arrangement. The municipality does make any upfront

payment to EESL. Rather, it pays EESL from the savings

made through replacement of the sodium vapour street

“EESL is doing good work

for the power sector in

Uttar Pradesh. They have

a credible and efficient

procurement process that

discovers a competitive

price.”

Alok Kumarprincipal Secretary (energy),

govt. of Uttar pradesh


BUSINeSSeS

led street lamp makes the city of Jodhpur abutting its famous mehrangarh fort shine through in resplendent glory.

Getty ImaGes


“We are happy with EESL’s

performance at SDMC.

They had procured the

street lights efficiently and

implemented the project

on time. Besides, their

maintenance systems are

reliable and cost effective.”

Puneet Goelcommissioner, South delhi

municipal corporation

IMPACT

lamps with LED ones.

This scheme, called the Street Light National Project

(SNLP) was flagged off with a big bang by Prime Minister

Narendra Modi on 5th January 2015. A few days later, on

9th January, South Delhi Municipal Corporation (SDMC)

signed up with EESL to get its street lights replaced.

SDMC is no small municipality. It is spread over 657 sq.

km and services a population of 5.6 million citizens (that’s

like putting together the population of Chicago, Houston

and Seattle). With the replacement of close to 200,000

lamps (that’s fourth-fifths the number of street lamps in

New York city), the power consumption has reduced by over

half, from 24 MW to 12 MW.

The financial gains are impressive. This is especially so

since the power distribution utility charges a high tariff for

street lights as compared to other consumer segments. So,

without having to pay a single rupee, SMDC stands to gain

close to $19 million over a seven years period. This, after

paying an annuity charge of close to $7 million per annum.

This includes not only replacement of the lamps but also

their maintenance by EESL for a seven-year period.

How did EESL achieve this efficiency?

Of course, LED technology enables a 50 per cent reduc-

tion in consumption. However, this comes at a cost. EESL

has, through an efficient process of bulk procurement,

brought down the price of the lamps. This, however, only

partly explains the gains. Another area where EESL has

achieved significant efficiency is in maintaining the lamps.

For instance, in the case of SDMC, there has been a dra-

matic 70 per cent reduction in the municipality’s annual

maintenance costs. To achieve this, EESL embraced tech-

nology. It set up a Centralised Control and Monitoring

System (CCMS) that would enable remote operation of

the lights. Hence faults are easier and faster to diagnose.

Significantly, the lower maintenance costs do not come at

the cost of service quality. In fact, the service is a lot bet-

ter, with a guaranteed uptime of 95 per cent. Further, a

24X7 helpline and web-based Application ensures that a

complaint is, at worst, only a few clicks away. And, it is

attended to within 48 hours.

To validate the service quality, EESL has undertaken

social audits. The evaluation reveals that citizens are a lot

more satisfied thanks to more brightness from the LED

lamps. Moreover, the also feel aa sense of enhanced safe-

ty and security owing to the brighter light emitted by the

LEDs lamps.

The project has now taken wings and has spread across

the country. This alone (without the annual maintenance)

saves the utilities as much as around $55 million per an-

num or 8 per cent of the annual budget of a prosperous

municipality like South Delhi Municipal Corporation. All

this at a stage when EESL has barely completed a little over

10 per cent of its target 35 million LED lamp replace-

ment, to be achieved by 2019.

dISrUptIon agent

Amit Gupta. Director, Eco Lite Technologies.

IN December 2013, the street price of a seven-watt LED

bulb was around $9.15. No doubt, these lamps were su-

perior in every manner to the dominant Compact Fluores-

cent Lamps in the market- they consumed less electricity

and lasted a lot longer since they didn’t heat up. However,

this wasn’t good enough reason for the consumer to shift


IntroductIon

amit gupta, director, eco lite technologies. his firm won the first eeSl tender for led bulbs (in January 2014). eco lite quoted a price that was close to half the then prevailing market price.


IMPACT

from CFLs since they were three times more expensive. The

savings didn’t justify the switch. Consequently, there wasn’t

enough incentive for the then prevailing domestic manufac-

turing industry to move away from CFLs—the margins were

good. This reflected in the market share of LED lamps in the

domestic lighting industry; in revenue terms, during Janu-

ary-December 2013, it was a mere 13.5 per cent.

And then came disruption.

In January 2014, EESL put out a tender in the market to pro-

cure seven lakh LED bulbs. This was significant volume since

procurement from manufacturers was limited by the reach of

the wholesale traders across the country. To that extent, the

balance of pricing power was vested with the manufacturer.

The industry’s response to the bid threw up a surprise. No, it

didn’t come from the popular or well-established players who

had been manufacturing lamps for a long time. Rather, the sharp-

est response came from Eco Lite Technologies, a new entrant in

the lighting business. Amit Gupta, director, Eco Lite Technolo-

gies, decided to diversify his family business that was steeped in

textile trade. He went ahead and bought automatic machines that

would assemble the LED lamp parts at his Gurgaon factory.

Gupta bid a price of $4.77 per bulb, close to half the then pre-

vailing street price. “I decided to aggressively bid since, unlike oth-

er players, I was not in the CFL business. Importantly, the volumes

were very large and hence I could provide a more competitive

price, closer to the cost of the materials used,” reminisces Gupta.

Laying the foundation

EESL could go ahead with tender only because it had sewed

up buyers for purchase of this large volume. It was no less

than an entire Union Territory. The energy service company

had tied with Puducherry to sell LED bulbs to its residents

through an innovative scheme. The proposition was compel-

ling: against a market price of close to $9.15 per bulb, EESL

make it available to the consumer at a price of 15 cents per

bulb. The rest would be paid by Puducherry electricity de-

partment over a ten-year period, relying on the energy sav-

ings accrued owing to use of LED bulbs.

This crucial tender sent a strong signal to the market. For

one, it demonstrated EESL’s capacity to pick up large volumes in

one go. Importantly, it imparted confidence to entrepreneurs to

set up new capacity in anticipation of large orders from EESL—

that EESL could procure and sell it to down to retail consum-

ers. This, in turn, led to intense competition and a consequent

tumble in EESL’s procurement price. In a matter of less than

three years after floating its first bid in early January 2014, LED

bulb prices crashed by 90 per cent. For, in October 2016, EESL

stepped into the market and procured 50 million units of LED

bulbs at an all-time low price of 58 cents per unit.

EESL’s effort to cradle the LED market has been

successful.

As it goes about its job as a market aggregator and demand

driver, EESL’s creates opportunities and incentives for entre-

preneurs like Amit Gupta to seize business opportunities and

help shape the market in a healthy manner.

catalySIng ‘maKe In IndIa’

WHEN Sunil Vachani, one of the top players in the

LED lamp manufacturing business, decided to pro-

duce components for LED lamps, he turned to the domestic

Capital market to fund the project. It was the first time that a

company in the lighting business in India had decided to raise

money from the Capital markets. The equity issue, floated in

mid-September, 2017, was an overwhelming success. As much PtI


IntroductIon

the Bombay Stock exchange (BSe) is asia’s stock exchange. as eeSl goes about creating a market for energy efficiency devices, companies can access the capital markets at stock exchanges like BSe and raise money. this helps them participate and, in turn, grow the energy efficiency markets.


IMPACT

as it recognised his firm, Dixon Technologies, as an efficient

manufacturer/assembler, it was essentially a vote for the larg-

er sentiment, that of the fast-paced growth of the domestic

LED market, which was expanding at 20-25 per annum.

And, Vachani had good reason to thank EESL for this.

The LED market had witnessed a stellar growth rate in the

recent years, to be more precise, since EESL began its procure-

ments in early 2014. Prior to this, the growth rate was mod-

est, with Compact Florescent Lamps leading the pack (refer

chart). For the domestic manufacturing industry, EESL sent

out strong signals in its procurement process. For one, the vol-

umes were significantly large. Secondly, they would be sold in

quick time, thanks to the innovative way in which EESL carved

out large markets hitherto unexplored. And finally, EESL in-

sisted that its procurements had to be manufactured in India.

This framework fired up the domestic LED lamp manufac-

turing base. Those who were manufacturing CFLs made an ag-

gressive yet smooth transition to the LED business. Not only

that, there was room for new capacity to be set up. As a result,

domestic industry production vaulted from 5 million units in

2013 to 600 million units in 2017. The LED industry turnover

which was $277 million in 2013 leapfrogged to $1.54 billion

in 2017. In the larger canvas of the overall lighting industry

that consists of other lighting forms as well like CFLs, incan-

descent and florescent bulbs, the contrast is a lot sharper. In

2013, LED constituted a mere 13.5 per cent of the $2.1 bil-

lion lighting industry. In 2017, it constitutes close to half the

$3.38 billion industry turnover.

Against this backdrop, imports over the last three years have

been negligible: a mere 5 per cent of the installed LED lamp

manufacturing capacity. This validates EESL’s efforts in shap-

ing the LED lamp market in a manner that the government’s

‘Make in India’ initiative succeeds.

A key indicator that the domestic manufacture of LED

lamps has taken roots in a healthy manner is demonstrated

by the growing manufacturing base for LED lamp compo-

nents. Broadly, a lamp has eight components and over the last

three years the capability to produce a good number of them

has gone up. Except for silicon wafers, domestic capability

has picked up in the rest of the spheres—casing, controls,

adhesives, MCPCB, heat sink, driver circuit, LED package

and optical lens.

In effect, EESL has enabled companies to grow their business

in the direction of backward integration in a profitable manner.

enaBlIng growth, dIverSIty

Diversity

In October 2016, global electronics major Philips won the

single largest procurement made by EESL, that of 50 mil-

lion nine-watt bulbs. When sold to consumers, it would have

a powerful impact—saving as much as 740 million units of

electricity every year, roughly the volume of electricity that a

state like Himachal Pradesh consumes in a month. In financial

terms, it would be of the order of $50 million per annum. For

this volume of absorption to happen in the domestic market in

quick time, the price had to be competitive.

Investment surge in Led manufacturing facility (in Million US$)

2014

20152016 2017

7.69 30.79(+23.1)

84.63(+53.84)

107.7(+23.1)


IntroductIon

rakesh goel, chairman h.Q. lamps manufacturing co. pvt. ltd at his led manufacturing facility in haridwar, Uttarakhand. he prefers to use semi-automatic machines since labour costs are competitive.


an engineer working on a led bulb at global lighting major phillips’ r&d center in noida, Uttar pradesh


IMPACT

Philips quoted an all-time low price of 58 cents

per bulb.

This was no accident. The global lighting major, steeped

in cutting edge lighting technology, runs a large Research

and Development (R&D) center in India. It follows a ‘asset

light’ business model where manufacturing is outsourced

to firms to whom it imparts technology. The result is a

prescription that ensures value engineering, quality, reli-

ability and competitive pricing, where core competency

optimises delivery.

However, does this leave room for Indian entrepreneurs

who reach out for technology and innovation on a small

scale? Do they stand a chance to compete and win orders

from EESL?

Yes, they do.

Only a few months before the October event, HQ Lamps

Ltd, an Indian firm won a contract to supply nine-watt

bulbs to EESL. It had no foreign collaborators and would

prefer to use semi-automatic equipment at its factory in

Haridwar, Uttaranchal. Says Amit Goel, Director, HQ

Lamps Ltd, “we prefer to use semi-automatic equipment

since they cost less and works well with the competi-

tive labour costs”. Technology is, no doubt, important

and Goel says that the overseas chip manufacturers have

helped in the overall design as well as cost reduction

measures. Goel doesn’t fear competition. As much as

HQ Lamps sells under its brand, it also manufactures

for other major Indian companies, accounting for 94 per

cent of its sales. “We aggregate demand, which helps us

produce large volumes that, in turn, lowers the fixed

costs,” says Goel. Over the last three years, Goel has

raised the capacity three-fold to 10 million bulbs per an-

num. The trigger, no doubt, is EESL’s entry into the mar-

ketplace to procure bulbs. Says Goel,” There is no doubt,

EESL taught the market how to sell LED bulbs. If it was

left to the market, the price reduction would not have

happened”. Importantly, Goel points out that in the pre-

EESL period, there was little or no price competition.

That reflects in near stagnant prices of LEDs as well as

the less efficient Compact florescent bulbs that notched

up the highest growth till EESL entered the market.

What is evident from this narrative is that EESL has,

through its mass procurement initiatives, shaped the LED

lamp market in a well-formed manner. For one, there is

diversity. As much as well-known global brands thrive,

local Small and Medium Enterprises (SME) are not left

out. That’s to say, branded firms as well as the original

equipment suppliers to these firms participate in EESL

“EESL has played an

important role in driving

conversion from older

technology bulbs—CFL

or incandescent—to LED.

EESL enjoys immense

credibility in the market

amongst both industry

and consumers.”

Sumit Joshivice chairman and managing director,

philips lighting India

Surge in Led bulbs production in the country (in Millions)

2014 2015 2016 2017

4.8662 251 600

Surge in new jobs created in the industry (in Millions)

2013-14

0.092014-15

0.1252015-16

0.162016-17

0.185


IMPACT

tenders and win orders. This, even though their business models are disparate.

While one relies on automation, the other harnesses domestic labour. For the

local firms, access to technology is delayed. As a result, the former generates

white-collar jobs while the latter creates employment, and a higher number, in

the blue-collar segment. According to industry estimates, in the last four years,

the lighting industry has created over half a million new jobs on the back of an

aggregate investment of $ 108 million.

Secular market

The frailties of a sharply growing market are many. For one, there is room for

cartelisation. This would hurt consumers. On the other hand, there could be

destructive competition. This, on the other hand, would imperil the smaller

players in the lighting business. To minimise these hues, EESL adopted an inno-

vative procurement strategy, where the order pie was broken up to ensure that

maximum number of players got a share of it. Ofcourse, they had to match the

price quoted by the lowest bidder. This procurement model has ensured a wider

dispersion of demand across LED manufacturers.

This has lent to greater predictability for the industry. Companies who were

invested in the CFL business have made s sharp switchover to the LED business.

Says Kanik Gupta, director, Compact Lamps, one of the largest manufacturers

of LED lamps in the country, “In early 2014, we were manufacturing six million

pieces of CFL and a mere 0.5 million pieces of LED lamps per annum. Now,

in late 2017, it is quite the opposite. We produce 8 million LED lamps and 2

million CFL lamps per annum.”

The sympathetic effect of EESL’s actions in the marketplace has been sig-

nificant. The average street price of an equivalent non-EESL bulbs (those sold

directly in the market as opposed to bulbs procured by EESL) fell by a third

to around $3.07 per bulb during the last four years. This, in turn, has spurred

demand for LED bulbs in the country. This knock-on effect has led to an irre-

versible investment cycle. EESL’s catalytic role in the country’s LED market is

reflected by the fact that in the last three years, the share of non-EESL branded

LEDs has risen from a negligible fraction to close to 50 per cent of total LED

sales in the country. Ge

tty

Ima

Ge

s


IntroductIon

lIghtIng Up the Statenorth Block, South Block and rashtrapati Bhawan, the imposing British-era red and buff sandstone buildings

house the corridors of power that govern India. for instance, the prime minister’s office is situated in South

Block. as much as the vast expanse of these grand structures is rather daunting for the common man, prime

minister modi allays these fears with his refrain, “minimum government maximum governance”.

these 20th century buildings have been decked up with led lights as if to promote the concept of

“maximum light, minimum electricity”.

eeSl enjoins this philosophy as it crusades for led bulb adoption across the country. the savings made

are large since lighting accounts for around 20 per cent of energy consumed.

3Building an Organisation

Getty ImaGes


Building an OrganisatiOn

Getty ImaGes



we want oUr money BacK…In late April 2013, Power Grid Corporation of India Ltd (PGCIL), one of the

main promoters of Energy Efficiency Services Ltd (EESL) wrote to the compa-

ny chairman stating that it wanted its money back. They had good reason to ask

for it. The transmission utility’s investment of close to $4 million, made three

years before, in 2010, had not been put to use by EESL; it was idling in the bank.

PGCIL’s provocation to recall its investment was, evidently, on firm ground.

Time was running out.

The company had been in operation since December 2009 and, over the next

three years, it hadn’t found much work. There was good reason. The concept of

energy efficiency had yet to catch on in India. As a result, its work was restricted

to preparing project reports for various companies, power utilities and munici-

palities seeking to undertake efficiency measures.

Firefighting ensued. The then chairman of EESL sought to assuage PGCIL. He

assured them that business would improve over the next three years as larger

energy efficiency projects would come up. Consequently, PGCIL’s investment

would earns handsome returns, he argued.

It was not just PGCIL. One more promoter, NTPC Ltd, a power generation

utility, wanted to scale down investments in the company. It seemed as if the com-

pany was coming apart. Two of the four promoters who had invested an equal

amount in the company weren’t keen on carrying on. Amidst this rather turbulent

Public sector behemoths power up eeSLpaid up share capital:

US$ 25.38 million32%NTPC Ltd.

32%Power

Finance Corp.

32%Rural

Electrification Corporation

Ltd.

4%Power Grid

Corporation of India Ltd.



environment, government restructured EESL and appointed a full time managing

director for the company (The earlier head, a CEO was working on a part time ba-

sis). A former Indian Revenue Service official, the MD had quit his job as a Program

Officer at United Nations Environment Programme (UNEP) at Bangkok, Thailand,

to join EESL in New Delhi. When he joined office on May 9, 2013, the first call he

received was hardly inspiring. A senior official from the Ministry of Power, which

controlled the promoter public sector companies, called to tell him that two of the

four promoters weren’t keen on carrying on. “Why did you appoint me here?” he

shot back. As much it conveyed the prevailing sentiment, the ministry’s writ held

forth; the promoters stayed invested, little knowing what lay ahead.

Their trust in the MD, however, was not belied. Over the next three years,

EESL’s revenues rocketed from $4 million in 2013-14 to a staggering $188.8

million in 2016-17. Profits vaulted from $0.15 million in 2013-14 to $7.8 mil-

lion in 2016-17.

How did this happen? The next chapter elaborates.

gettIng a foot In Dealing with Legacy

“This was a business where the consumer was not convinced of the gains from

energy efficiency measures. The immediate consumers were State-owned power

distribution utilities,” observes Neelima Jain, the first program manager of Un-

nat Jyoti by Affordable LEDs for All (UJALA), a LED bulb distribution scheme

that flourished to become EESL’s flagship program.

The scepticism, for a good part, was born of the legacy that energy efficiency

programs in India suffered from. “There was a vacant space marred by historical

failures of pilot projects,” reminisces Neelima.

To explain this, a short recount will be in order.

One of the most popular energy efficiency schemes was the Bachat Lamp Yo-

jana (BLY). Launched in early 2009, power utilities across as many as 17 states

across the country signing up for it. The scheme aimed to distribute energy effi-

cient Compact Fluorescent Lamps (the more efficient LEDs had just then entered

the market and were frightfully expensive) at the average price of a conventional Ge

tty

Ima

Ge

s

eeSl’s vision seeks to provide every part of the country with energy efficient devices at competitive prices



household incandescent bulb i.e. 23 cents. The success of this scheme hinged on

a larger theme, that of global carbon trade rooted in a United Nations system

known as Clean Development Mechanism (CDM). Soon after its launch, BLY got

its CDM registration in June 2010.

Under the CDM mechanism, developers of projects that avoided emission

of greenhouses gases like carbon dioxide, ended up earning UN-issued carbon

credits. In theory, this could be bought by countries and companies that sought

to reduce their emission. For the CDM to succeed, in effect, large developed

countries had to sign up with the United Nations’ plan. This failed to happen,

resulting in the collapse of the carbon trade market.

There was one more issue. While dealing with the state power distribution util-

ities, going by global precedents, energy savings was determined using historical

data. This proved to be a contentious issue as the data suffered from infirmities.

Keys to the Demand Gateway

After the MD took over in early May 2013, EESL’s early strategy was born of this

learning. The financial transaction underlying the sale of energy efficient lamps

was reviewed. Given the financial fragility of the State-owned distribution utili-

ties, it was now a ‘pay as you save’ approach. Secondly, given the hazy nature of

data, the savings would be measured from the present and not based on histor-

ical data. And finally, the entire financial framework would be put through the

State electricity regulator’s scrutiny to ensure that the electricity consumer’s

interest was upheld. This process would inspire confidence in a key stakeholder,

the utility managers, who would finally sell down the lamps to end consumers.

For several months, the new management at EESL knocked on the doors of

power utilities across the country with their strategy even as they simulteneous-

ly commissioned pilot projects to demonstrate their credentials. The projects

were aimed at demonstrating the savings that could be generated by changing

household lamps, street lights and irrigation pumps in the farm sector.

A break through

It was only towards the end of the year (2013) that EESL managed to get some

business. EESL signed up with the Union Territory (UT) of Puducherry to



(opposite page—clockwise from top left) prime minister Shri narendra modi inaugurating the ‘Ujala’ led bulb replacement program alongside the Street light national program (Slnp) In new delhi on January 5, 2015; a view of the newly installed streetlights at puducherry; a view of the newly installed streetlights at puducherry; led Street lights at vishakhapatnam; a resident of puducherry walks upto a kiosk in the city in early 2015 to buy three led bulb for $0.15 cents apiece, where the open market price is over $9. the bulbs are being supplied through an arrangement between the puducherry electricity department and eeSl

supply 750,000 LED bulbs at a cost of around $3.5 million. The deal was not

without its challenges.

Puducherry insisted on a ten-year payback period, based on the savings made

by the energy efficiency of the LED bulbs—they could do with lower purchase

of electricity. This, however, meant that the bulbs warranty had to last an entire

decade. EESL, on the other hand, could at best procure bulbs with an eight-year

warranty from the manufacturer. The question before the management was:

should they stick their neck out and take a risk that they had no control over?

While the Public-Sector promoters were not too keen, the MD forged ahead

and signed the deal. His argument was simple: “if we don’t take measured risk,

we won’t be able to grow our business.”

In early 2014, Puducherry’s Chief Minister announced it with much fanfare;

each consumer could take home three LED bulbs for $0.15 apiece. Against this,

the open market price was a frightful $9.15 per bulb. Not only that. Going for-

ward, the consumer would save on the power bills.

To achieve this, EESL negotiated with the Puducherry Electricity Department

on the lines of the globally renowned Standard Options Program (SOP). The SOP

shapes a utility’s power procurement plan in a manner that ensures primacy of en-

ergy efficiency. With widespread use of LED lamps, the utility can pay out of the

savings made on several fronts - lower Transmission and Distribution losses, lower

subsidy outgo for consumer segments they pay less than what it costs to serve them.

Importantly, EESL concluded the deal in a manner that left the Puducherry

government much satisfied. They did not insist on sharing the savings that ac-

crued from reduction in peak demand. For at such times, the utility is forced to

buy expensive power from the market.

This was only one aspect of EESL’s approach. The other was the price at which

it procured the bulbs. EESL got them at $4.77 apiece through an open competi-

tive tendering process. This was sold to Puducherry Electricity Department for

$5.20 per bulb, 43 per cent cheaper than the then prevailing open market price

of $9.15 per bulb. A higher procurement price would have pushed back the re-

payment period, making it difficult for EESL to consummate the deal.

The scheme, not surprisingly, was a runaway success.

It was a modest, yet powerful beginning for EESL. Importantly, the compel-

ling proposition for the consumer was shorn of government subsidy. It was a

win-win deal for all stakeholders—the consumer, the electricity supply utility,

the State and finally EESL.

The Puducherry deal was a harbinger for larger deals. Not just because of

what it achieved but also the fact that its arrangement with Puducherry was

solemnised at the altar of the State electricity regulator. This established its cred-

ibility not only in Puducherry but across the country.

Rising to the Occasion

Shortly after the Puducherry deal was signed and implementation began

in February 2014, EESL’s MD got a call from a senior official in Andhra

Pradesh government. He told him that Chief Minister Chandrababu Naidu

was curious to know more about the Puducherry project. Shortly thereaf-

ter, four senior officials from one of the State’s utilities descended on the

former French colony. And thus, EESL bagged its second project sometime

in early August 2014.

This was close to three times the size of the first project, involving supply of 2

million LED lamps to two districts in Andhra Pradesh. This time again, the good

news didn’t come without its set of challenges.

Time was short; the chief minister had set the inauguration date for 2nd

October. The EESL team had to work to a tight schedule. And, the news from

industry was worrisome. “The industry had a meeting with the MD and his team

on August 20. They were sceptical of delivery of such large volumes”, recalls

Venkatesh Dwivedi, Chief General Manager (technical), EESL. It was however,

made clear that the delivery date was not negotiable. As the discussion pro-

gressed, several players argued that there was room to improve the bidding con-

ditions to enable delivery of this volume. “They pointed out that earlier bid in

Puducherry had insisted on sourcing the LED chip, a critical component, from

all

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Hitting the roof: eeSL Growth since inception



top global brands. No doubt this was aimed at ensuring quality, it also made the

process restrictive. We listened to them and replaced the condition with perfor-

mance specifications”, says Dwivedi.

This approach induced enormous confidence in the manufacturers as it shored

up not only EESL’s credibility but also its willingness to listen. The bulbs were

delivered, the launch-inauguration went off successfully and the bulb distribu-

tion commenced. However, a few days later, the local EESL manager called to

say that the schemed rollout had to be put on hold. The reason was serious and

one that had no solution: a cyclone was going to hit the coast of Andhra Pradesh

shortly. This was no ordinary storm. When it finally hit the coast on October 16,

cyclone Hudhud ravaged the State, causing loss of life and property. The cyclone

hit the coastal city of Vishakapatnam at over 100 miles an hour, uprooting elec-

tric poles and bringing the city to a standstill.

Chief minister Naidu rushed to the city and oversaw the rescue and rehabili-

tation operations. The need of the hour was to restore power supply and light up

the city streets. For this, Naidu turned to EESL. It was a disaster relief mission

and EESL rose to the occasion. It was no small task. As many as 91,000 poles

had to be erected and lamps installed in quick time. In six weeks’ time, 65,000

street lights were up and running, enabling the city to limp back to normalcy.

The rest were set up over the next few weeks.

Amidst this challenge, EESL did not forget Naidu’s other request. He had

asked EESL to ensure that the street lights along the road connecting the air-

port to the city were lit up when he came visiting it again a fortnight later, on

November 9th.

EESL ensured this. No doubt it was symbolic in nature, a step towards re-

storing connectivity to the city. However, what it did was to enable helped EESL

gain the trust of the political class in its ability to deliver energy efficiency prod-

ucts and services on time.

It was a sign of things to come.

On 5th January 2015, Prime Minister Shri Narendra Modi announced and

flagged off a national program Ujala, an acronym for Unnat Jeevan by Afford-

able LED and appliances for All. Under this scheme, Shri Narendra Modi

announced that EESL will target to replace 770 million energy inefficient

incandescent bulbs by 2019.

With this, EESL’s journey began on the fast lane.

SoarIng hIgh“This will not work. I cannot deliver”. This refrain was hardly to be expected from

EESL MD, that too on the eve of an announcement by Prime Minister Mr Naren-

dra Modi that recognised the energy efficiency firm’s capabilities. However, the

MD knew that as much as his firm had done a good job over the previous several

months, it wasn’t equipped to deliver on the forthcoming announcement. So, he

met the Union power secretary and pleaded helplessness. Power secretary P.K.

Sinha assured him that he would strengthen EESL, a commitment, he kept.

The next day, on 5th January 2015, Prime Minister Shri Narendra Modi an-

nounced ‘Ujala’ (Unnat Jeevan by Affordable LEDS and appliances for All), a

national program for EESL to replace 770 million incandescent bulbs by 2019.

It heralded EESL’s arrival on the national platform with a mandate that set it on

steep growth path. This was not an easy task.

In its current form, EESL was doing 3 million bulbs per annum. Now, with

the PM’s directive, the target had ratcheted to 90 million bulbs per annum, a

thirty-fold increase. P K Sinha kept his word. He met the four promoter com-

panies’ chairmen and asked them to put more money into the company; there-

after, the Share capital was raised from $ 14 million to $25.4 million. At his be-

hest, they also loaned senior management personnel to EESL. This fortification

helped. EESL got down to work, implementing the Ujala mandate.

Ambition begat ambition. The Ujala program ramp did not happen in isolation.

EESL also worked on its street lighting program, the Street Light National Program

(SNLP). This was inaugurated by Prime Minister Mr Narendra Modi alongside the

Ujala program on 5th January 2015. Under this program, EESL went about replac-

ing street lights in cities across the country with efficient LED substitutes.

EESL’s forays went beyond lighting solutions. It turned its attention to the

farm sector. The company successfully implemented a few projects in Karnataka

and Andhra Pradesh, where replaced inefficient pump sets that lift water from

the ground. The scheme known as the AgDSM (Agricultural Demand Side Man-

agement) program, left the farmer and the power utility a lot happier. Not only



did the utility save on power bills (since it gives it free to farmers), the farmer

got a more efficient and resilient machine that worked even when the quality of

supply was poor.

At the end of the year, 2015-16, the diversifications didn’t come at the cost

of Ujala, the flagship program. The company ended the year selling 90 million

bulbs. The accomplishment demonstration that EESL could shift gears in quick

time and achieve what was clearly an ambitious target.

This reflected in EESL’s financial performance. Turnover vaulted eleven times

over the previous year’s figure to $123.5 million, while profits rose four times

to $5.7 million.

Keeping Momentum

Having set a scorching pace for itself, it was now about maintaining momentum.

The bulb program was on an even keel. During the next year, 2016-17, EESL

now exerted itself on selling other energy efficiency devices.

Diversification

The Ujala national program also began selling energy efficient

fans and LED tube lights. Again, owing to the high volume and

the efficient procurement process, EESL could sell it well be-

low that available in the market place. As against an open mar-

ket price of $6.15-$9.2 for a 20 W LED tube light, EESL sold

the same for close to half that price at $3.3. The fans, on the

other hand, were 30 per cent more efficient and were priced

competitively at $18.46 apiece.

During the year, the Street Light National Program (SNLP)

moved at a faster pace. Work in two states Andhra Pradesh

and Rajasthan were completed while progress was being

made in eight others states, namely, Himachal Pradesh, Pun-

jab, Tripura, Chhattisgarh, Jharkhand, Gujarat, Maharashtra

and Telangana. In six other states, Uttar Pradesh, Bihar, Jam-

mu and Kashmir, Assam Odisha and Uttarakhand, EESL had

signed up and was about to commence work.

Seeding business

A natural progression from chasing devices was towards buildings. EESL rec-

ognised that it was important to assess the efficiency of buildings as a whole

since they housed a plethora of energy consuming devices. During the year,

EESL signed up with organisations with country-wide offices. These include The

Central Public Works Department, Indian Railways and Maharashtra State pub-

lic works department. It also began conversations with public sector banks to

enhance the efficiency of their ATMs.

There is more to life than devices. EESL realised the essential nature of work

done by a municipal corporation—especially water supply and sewage dispos-

al—to improve the life of its residents. As part of its Municipal Energy Efficien-

cy Program (MEEP), EESL signed up with several states to improve their public

water works and sewage systems with no upfront costs to boot.

On the farm front, EESL made significant progress. It signed up with the Andhra

Pradesh government and its electricity supply utilities for supply of 100,000 ener-

gy efficient agriculture pumps (AgDSM program). It also concluded pilot projects

in Maharashtra and Rajasthan. In a significant move, it developed a solar-based ag-

riculture pumps for Gujarat and Andhra Pradesh (solar AgDSM

program). EESL believes that these are key growth areas and

over time, they will yield large business prospects.

Improving welfare schemes

With a view to catalyse government-led education schemes,

EESL tied up with Indian Institute of Technology-Mumbai,

to develop solar lamps and sell then under schemes set out

by the Ministry of New and Renewable Energy (MNRE).

This has led to employment opportunities for women as

much as provided LED lamps to children in villages across

the country. EESL’s role has been that of procuring and sup-

plying material for the lamps.

EESL was appointed as the implementing agency for

‘Ajay’(Atal Jyoti Yojana), an important government scheme

that seeks to illuminate rural, semi-urban and urban areas in

“The LED industry

is projected to grow

dramatically on the back

of the initiatives being

taken by the government.

It is expected to be

approximately 60% of the

overall lighting industry

by 2020.”

Electric Lamp and Component Manufacturers’ Association of

India (ELCOMA)

INTerNATIoNAL eNerGy ASSoCIATIoN STUdy: How UJALA ANd eeSL’S STrATeGy HAS IMPACTed THe INdIAN MArKeT

The Indian LED market value grew by 10 times in just five years and annual domestic production increased from approximately 3 million LED bulbs in 2013 to 62 million in 2015 (Elcoma). It is now the second largest LED market in the world.

UJALA has played an important role in this rapid growth.

In 2014, LEDs had only a share of 0.1% of the annual residential lighting market in India.

In 2015, the LED share of the market jumped to a remarkable 15%.

EESL’s LED bulk procurement has also contributed to the reduction in LED retail market prices from approximately $12.3 per LED bulb in 2012 to $3.07 per LED bulb in 2016—leading to one of the fastest LED price reductions in the world.

This has helped improve acceptance and availability of LEDs in the Indian market.

EESL’s specifications, including the three year warranty requirement, have ensured that the LED bulbs procured meet high quality standards with current failures at only 0.3%.

This is helping build market confidence in the product.

01India Is Now the World’s Fastest

Growing LED Market

02Domestic LED Market

is on the Rise

03Economies of Scale at Work

04High Quality is now Priority



the states of Uttar Pradesh, Assam, Bihar, Jharkhand and

Odisha, where grid connectivity is less than 50 per cent.

Going Overseas

The skills gained during the steep learning curve over

the previous year propelled EESL to look for oppor-

tunities overseas. The results during the year were

impressive. EESL signed up Memorandum of Under-

standing (MoU) with several neighbouring countries.

These include Bangladesh, Sri Lanka, Nepal, Thailand

and Vietnam. The scope of work involved around supply

of LED bulbs and LED street lamps, as an extension of

the Ujala scheme overseas.

This widening of horizon with a balanced momen-

tum yielded excellent financial results during the year

2016-2017. The company notched up revenues of

$188.8 million, a growth of 52.8 per cent over the pre-

vious year. Profits, meanwhile surged 40 per cent to

around $8 million.

New challenges

Meters: As power distribution utilities gravitate towards

reform measures, they look for efficiency in every ele-

ment of their commercial network. A major consumer

whose consumption monitoring leaves much to desired

is the farmer. EESL has designed a program called the

Smart Meter National Program. Under this, the meters

‘talk’ to the utility manager, without an intermediary.

The meters are embedded with a communication chip

that relays real time data. This helps the utility straight-

away identify the leakages in supply. In October 2017,

EESL procured meters at around half the open market

price. This procurement came on the back of two deals—

one to supply three million meters to Uttar Pradesh and

another million to Haryana.

Cars: A month before, in September 2017, EESL success-

fully planted its flag in yet another domain—automotive

vehicles. It successfully floated a tender to procure as many

as 10,000 electric vehicles (In two phases). This underpins

yet another government plan to nudge consumers to shift

to electric cars. EESL procured the vehicles at 25 per cent

below the market.

“EESL tender provided us the opportunity to participate

in boosting e-mobility in the country, (and) at the same time

accelerate our efforts to offer a full range of electric vehi-

cles to the Indian consumers,” observed Guenter Butschek,

managing director and chief executive officer of Tata Mo-

tors, the firm that won the bid.

For EESL, the game has just begun; the vehicle bid is a

stepping stone to opportunities in the eco-system for elec-

tric cars for example, battery storage and charging stations.

evolUtIonUnnat Jeevan by Affordable LEDs and appliances for All—

Ujala, EESL’s LED bulb replacement project—is more

than just its flagship program. The first word of the ex-

panded acronym reveals an important character of EESL

important. Unnat in the national language connotes inno-

vation. From selling LED bulbs only four years back, in

2013, the company now, in late 2017, is selling e-mobility

vehicles. The common strand running through this journey

is that of innovation, innovative strategies.

The initial strategy

In 2013, when EESL got into selling LED bulbs, it realised

that the state of the market—fragmented and miniscule.

“EESL tender provided

us the opportunity to

participate in boosting

e-mobility in the country,

(and) at the same time

accelerate our efforts

to offer a full range of

electric vehicles to the

Indian consumers.”

Guenter Butschekmd & ceo, tata motors



So, it engaged with utilities and found a large consumer in the Puducherry Elec-

tricity Department. On the back of this, EESL procured bulbs at half the then

prevailing market price. The model was carried over to Andhra, where it sold

over 2 million bulbs. While utility sale anchored its business, it also set up kiosks

to sell directly to consumers. However, this was small in number. EESL was

comfortable with the fact that procurement prices were dropping on the back

of large volume deals with utilities. From $4.77 per bulb in January 2014, the

price had come down to around $1.54 in January 2015, when Prime Minister

Narendra Modi upended the scope of bulb scheme and declaring it a national

project.

With this, EESL’s mandate had undergone a drastic upward revision. Now, it

had to sell 90 million bulbs in a year.

The challenge now lay in attempting a sharp ramp up in operations. There

was significant progress during the initial months. Between April to end-No-

vember 2015, the company sold 30 million bulbs. No doubt, it was ten times

that achieved during the entire previous year. However, at this rate the company

didn’t look set to reach the annual target of 90 million bulbs.

The EESL team huddled together and reflected on their strategy. They

realised that the existing model of selling through the electricity utility had

its limitations. It involved a high degree of compliance and monitoring. The

utility had to ensure that the all the sales were for real and were being used.

After all, there was immense scope for hoarding and trading it, since the

bulb cost was half the prevailing open market price. This burden dampened

the utility’s interest in the bulb replacement scheme. And while business

was slowly coming in, it would certainly not improve to the point that EESL

could meet its annual targets.

So, what did EESL do?

A new (bold) approach

EESL decided to work backwards to assess the daily volume of sale to meet

this target. Once this daily goal was set, EESL took the kiosk route—it set up

outlets in cities across the country at a frenetic pace to maximise its direct sale

to consumers.

On the other side, it was hoping for further reduction in prices—It bet

on the fact that as the sale volume rose, and it went for significantly larger

procurements, manufacturers would quote lower prices to them. This, since

the manufacturers would see a certainty in the procurement volumes and

set up higher capacities. In effect, they would move further in the direction

of a high volume-low margin business as opposed to a low volume-high

margin model.

EESL ramped up from a couple of hundred outlets in 2015 to 5000 outlets in

two years. In October 2016, EESL got its lowest quote—58 cents a bulb.

To ensure healthy competition in procurement process, EESL divided

the order pie amongst the bidders - so long as the rest matched the lowest

price. “Large supplies to consumers across the country had to be compli-

mented with a credible procurement process,” says Rajneesh Rana, Head of

Contracts at EESL.

On the institutional side, EESL maintained a highly committed workforce.

On the other side, the key person who helped ensure that the hiring didn’t

falter was A.K. Arora., Advisor (HR), EESL. Arora ensured that EESL picked

up the minimum number of permanent employees. The rest were either con-

sultants, or on fixed tenure or outsourced. For instance, in 2013-14, perma-

nent employees represented 21 per cent of the workforce. In 2015-16, this

was down to 14 per cent. To keep the non-permanent staff motivated, they

are evaluated against stiff targets and if they meet them over a couple of years,

they have a chance of getting absorbed.

A wide lens view

At EESL, the process of evolution has left it resilient and robust. The im-

print has also fashioned it as a firm that no longer simply sells bulbs or cars.

Rather, it sells a service that enables the client to enjoy savings and im-

proved productivity through EESL’s innovative strategies that are carefully

crafted. Underlying it lies core competencies in demand aggregation, bulk

procurement and transparent operations. This facilitates innovative business

enablers like pay-as-you-save, risk management, nil upfront investments.

All in pursuit of growth. n

energy effIcIency ServIceS lImIted(a Joint venture under the ministry of power, government of India)

4th & 5th floor, IwaI Building, a-13, Sector-1

noida, Uttar pradesh 201301

tel: +91-120-4908000

www.eeslindia.org

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